FDIC Enforcement

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In one of the first tests of the implications of the Jarkesy decision for other federal regulatory agencies, an individual accused by the FDIC of participating in fraudulent loan activity is asking a federal judge to dismiss the administrative proceeding the FDIC brought against him, contending, among other things, that he is being denied his right to a jury trial.… Continue Reading

In February 2024, the Federal Deposit Insurance Corporation (FDIC) entered into consent orders with two banks who partner with fintechs to offer “banking as a service” (BaaS) related to safety and soundness, compliance with applicable laws, and third party oversight.  BaaS refers to arrangements in which banks integrate their banking products and services into the services of non-bank third-party distributors and the distributors deliver the integrated banking services directly to the customer. … Continue Reading

The FDIC recently announced that it has entered into a Consent Order with Cross River Bank (CRB or Bank) to resolve FDIC charges that the Bank engaged in unsafe or unsound practices related to its fair lending compliance.  (The Consent Order was issued in March 2023 but not made public until the end of last month.) … Continue Reading

Earlier this month, the Federal Deposit Insurance Corporation (FDIC) issued cease-and-desist letters to a cryptocurrency exchange and a fintech, demanding that each of these entities immediately stop making false and misleading statements about FDIC coverage of their financial products. The FDIC also issued cease and desist letters to two marketing websites, demanding that they remove false and misleading statements about FDIC insurance coverage with respect to the cryptocurrency exchange.… Continue Reading

The OCC and FDIC issued proposed rules this week intended to eliminate the uncertainty created by the Second Circuit’s decision in Madden v. Midland Funding.  In that decision, the Second Circuit held that a nonbank that purchased charged-off loans from a national bank could not charge the same rate of interest on the loan that Section 85 of the National Bank Act (NBA) allowed the national bank to charge. … Continue Reading

HomeStreet Bank recently agreed to the issuance of an order to settle an allegation by the FDIC that the bank’s discontinued Home Loan Center-based mortgage business line violated the Real Estate Settlement Procedures Act (RESPA) “by entering into co-marketing agreements using online platforms and desk rental agreements that resulted in the payment of fees to real estate brokers and home builders for their referrals of mortgage loan business.”… Continue Reading

On July 5, 2017, the U.S. District Court for the District Columbia, in the lawsuit filed in 2014 challenging “Operation Choke Point” — a federal  enforcement initiative involving various  agencies, including the Consumer Protection Branch of the Department of Justice (DOJ), the Federal Depository Insurance Corporation (FDIC), the Federal Reserve (Fed), and the Office of the Comptroller of the Currency —  denied the  agencies’ motions to dismiss and/or for summary judgment and permitted the payday lender-plaintiffs’ due process claims to proceed.… Continue Reading

The FDIC announced last week that it had entered into settlements with Bank of Lake Mills and two non-bank “institution-affiliated parties” through which the bank originated loans for allegedly engaging in unfair and deceptive practices in violation of Section 5 of the FTC Act.  The settlements should serve as a reminder to non-banks entering into arrangements with FDIC-supervised banks that they can become subject to FDIC enforcement authority.… Continue Reading